"The Role of Land Market in Achieving the Scale for Adaptation to Climate Change: Evidence from Bangladesh"
Abstract: This paper studies whether climate-induced shifts in land productivity can trigger structural adaptation in agriculture by overcoming long-standing frictions in land markets. I focus on coastal Bangladesh, where rising sea levels have increased dry-season soil salinity beyond the threshold at which conventional crops can survive. Using high-resolution census data on over one million farm households, I exploit a natural discontinuity in salinity at the hydrological boundary between the tidally active and mature regions of the Bengal delta. I implement a fuzzy spatial regression discontinuity design and an instrumental variables strategy to estimate the causal effect of high salinity on land use and farm structure. I find that salinity above 12 dS/m leads to a large reallocation of land from crop farming to aquaculture—by 32 to 50 decimals per household—and induces a 52 percent increase in average farm size and a 23 percent rise in farm size inequality. This transition is not driven by land sales, which remain stagnant, but by consolidation through the rental market: the share of households renting in land declines, while land rented
per renter doubles. I show that this process is shaped by local frictions. In particular, land reallocation is significantly more responsive in villages with greater religious diversity (which improves cross-group contract enforceability) and less responsive in villages with high land parcel fragmentation (which raises transaction costs). These findings highlight the potential for market-mediated adaptation to climate change even in historically stagnant land markets, but also underscore the role of social and spatial frictions in shaping who adapts and how.
“Underinvestment in a Profitable Adaptation Technology: The Role of Market Access”
Abstract: Ricardian theory suggests that farmers can potentially mitigate the effects of climate change induced shocks by reallocating their lands according to evolving comparative advantage. However, switching to a new farming requires the development of marketing intermediaries that provide forward linkages for the new output. Hence, barriers to market access faced by the intermediaries can potentially result in under adaptation to climate change. This paper studies this issue in the context of salinity intrusion in coastal Bangladesh. While a profitable technique to adapt to salinity intrusion is reallocating lands from crop farming to salinity resistant aquaculture, switching to aquaculture requires the development of a new market with intermediaries. Using exogenous variation in relative mean sea level over time as an instrument for salinity intrusion and colonial transportation network as an instrument for transportation cost, I show that high transportation costs to ports result in under reallocation of land to salinity resistant aquaculture. Furthermore, the mechanism that drives this underinvestment is the double marginalization by the middlemen in areas with high transportation costs. This extracts away the surplus that would have otherwise incentivized farmers to switch to aquaculture. The results suggest that public investment in transportation infrastructures can have a complementary effect on private adaptation by providing better market access.
Taking the Second Moment into Account: Effects of Increased Weather Variability from Climate Change on Farming Decisions and Outcomes in Bangladesh
(with Jared Stolove)
Adapting to Drinking Water Scarcity in Coastal Bangladesh through an Entrepreneurship Approach
(with Ahmed Mushfiq Mobarak and Jared Stolove)
Livelihood adaptation to climate change through diffusion of resilient farming technologies at scale
(with Ahmed Mushfiq Mobarak)
Approaches to Studying Adaptation in Early Climate Change Battlegrounds
(with Ahmed Mushfiq Mobarak and Matthew Kahn)
(with Ahmed Mushfiq Mobarak)